Pages 107-114

INFORMATION FROM THE EPO

Notice dated 1 March 1997 concerning the amendment of the European Patent Convention, the Implementing Regulations and the Rules relating to Fees^*

Reduction of fees and extension of the period for payment of designation fees from 1 July 1997

In its decisions of 5 December 1996 the Administrative Council amended the Convention, its Implementing Regulations and the Rules relating to Fees with effect from 1 July 1997. The amendments explained below provide for a reduction of the procedural fees of the EPO and for the extension of the period for payment of designation fees. The new fees apply to payments made on or after 1 July 1997; the new period applies to all European patent applications in respect of which the designation fees have not been validly paid by that time and the time limit for paying them under Article 79(2) (old) EPC has not expired.1

I. Reduction of fees

Amendment of the Rules relating to Fees

Article 2, items 1 to 3a, of the Rules relating to Fees is to be amended to read as follows:

1. The fee reduction approved by the Administrative Council on a proposal from the President of the EPO takes account of the development of the European Patent Organisation's budget and of the wishes of the European patent system's users. In view of the Organisation's sustained budget surpluses and of the provisions of the Convention with regard to the level of fees and the balancing of the budget (Article 40(1) EPC), a significant reduction in European procedural fees was called for.

2. For an average European application with eight designated states, the total easing of the fee burden brought about by the reductions amounts to DEM 2 150, or some 20 % of the fees currently payable to the EPO up to the time of grant. Its overall volume is approximately DEM 140m per annum.

3. The reduction concerns the fees payable at the start of the European grant procedure, ie the filing, search and designation fees. Thus in the initial phase, that is up to the time of filing of the request for examination, only DEM 1 950 will now have to be paid rather than DEM 5 300 as at present, if allowance is made for the approved deferral of the due date for designation fees (see II below). This major reduction of the initial fees makes it easier to gain entry to the European procedure whilst also rendering the procedure attractive to independent inventors and to small and medium-sized enterprises.

4. The emphasis of the reductions is on the designation fees. Whereas in the past the cost of an average application with eight designations was DEM 2 800, the designation fees at the new rates amount to only DEM 1 200. In the future it will cost only DEM 2 550 to designate all 18 EPC contracting states instead of around DEM 6 000 as at present. This will make broader designation attractive to applicants who in the past have chosen on grounds of cost not to designate various contracting states. Thus the major reduction of the designation fee also takes into account the situation in the single European market, where innovative products are marketed on a transnational basis and where geographically incomplete cover may lead to distortions in competition and to economic disadvantages.

5. The reduction of the filing and search fees further eases the fee burden in the initial phase of the European grant procedure whilst also appreciably lightening the burden to applicants who require protection in only a few states.

6. Furthermore the reduction of the search fees facilitates access to the PCT for European applicants. This is of particular interest to those filing European first applications, because they have to pay only the European search fee (reduced to DEM 1 700) for the first filing and are reimbursed the international search fee (reduced to DEM 2 200) in full if they file an identical PCT application later. European applicants basing their PCT application on an earlier national filing benefit from the lower fee for the international search.

II. Extending the period for payment of designation fees

Amendment of Article 79(2) EPC

Article 79(2) EPC is to be amended to read as follows:

"(2) The designation of a Contracting State shall be subject to the payment of the designation fee. The designation fees shall be paid within six months of the date on which the European Patent Bulletin mentions the publication of the European search report."

7. In the currently applicable formulation of Article 79(2) EPC, designation fees are payable 12 months after filing, and at the latest 13 months after the priority date. In practice this means that for 90% of direct European applications (applications not filed via PCT route) they are payable immediately after filing, ie usually together with the filing and search fees.

8. European direct applicants are currently required to pay the designation fees at a time when they have not yet received the European search report and therefore often cannot adequately assess the prospects of their application. In Euro-PCT proceedings, the situation is different. Here, the European designation fees are payable only on entry into the European phase, ie 21 or 31 months after the priority date. Applicants are thus able to keep their designation options open until they have the international search report or the international preliminary examination report to help them decide whether the application is likely to succeed. As a rule, Euro-PCT applicants also by that time have a better idea of the commercial worth of the geographical cover available to their patents, and can therefore target their designations far more accurately than is currently possible with direct European applications.

9. There is a further structural disadvantage for direct European filings in that they always incur designation fees, which for Euro-PCT filings only become payable when the application actually enters the European grant procedure. Given that European applicants account for 52% of direct European but only 39% of Euro-PCT filings, European industry is at a particular disadvantage under the existing fee structure.

10. The Office's fee policy has always sought to keep both routes attractive - direct European and Euro-PCT alike. This objective is even more important now that Euro-PCT filings make up over 50% of the total.

11. The deferring of the due date for designation fees approved through the amendment to Article 79(2) EPC eliminates the structural disadvantage to direct European filings and substantially reinforces the relief brought about by reducing the fees.

12. Deferring the due date for designation fees to the time of filing of the request for examination (Article 94(2) EPC) means that the payment period is extended by around 12 months. Thus in future the designation fees for direct European applications will as a rule be payable within 24 months of the date of filing or priority, but only if the applicant wishes to continue with the grant procedure after examining the search report. The designation fees for Euro-PCT applications entering the European phase will continue to be payable within 21 or 31 months of the date of priority (Rule 104b(1) EPC; Article 79(2) (new) EPC does not apply).

13. Synchronising the time limits for paying designation fees and for filing the request for examination/paying the examination fee will help applicants and the Office to keep track. Third parties will also easily be able to see how things stand, because the start of the six-month period is indicated in the Register of European Patents and the European Patent Bulletin.

14. When the European application is published, the applicant may in future not yet have decided for which states he actually requires protection. This will not make monitoring of rights by third parties any more difficult. After all, until the applicant validly files a request for examination it is not clear whether he wants a patent at all. Even today, competitors have to consult the Register of European Patents to find out whether the examination procedure has been initiated for a given application. At the same time, they can identify the states in respect of which designation fees have been paid; the states which are thereby definitively designated are indicated in the Register and the Bulletin once the time limit has expired.2

15. This is anyway a situation with which the patent world is already familiar, now that over 50% of all European applications are filed via the Euro-PCT route. By paying a single designation fee, an international applicant gains an option on protection in all the EPC states; not until he pays the European designation fees on entry into the European phase is it clear which of them he actually wants his patent to cover.

16. Deferring payment of designation fees has no practical effect on the provisional protection conferred by published European applications. It is true that as a result of the new ruling such applications in principle enjoy provisional protection in all contracting states (Article 67(1) EPC). However, this effect is deemed never to have occurred if the relevant designation fee is not paid (Articles 67(4), 91(4) EPC). To that extent the legal position for direct European applications is in keeping with Article 158 EPC governing the Euro-PCT route. Provisional protection would also continue to require filing a translation of the claims.

17. Article 79(2) EPC as amended is applicable to all European patent applications in respect of which, on 1 July 1997, the designation fees applicable up to that time have not yet been paid and the basic time limit for paying them under Article 79(2) (old) EPC has not expired.

Consequent amendments to the Implementing Regulations

Addition of Rule 23a EPC

The following new Rule 23a is to be added to Part II of the Implementing Regulations in the new Chapter V entitled "Prior European applications":

"Rule 23a

Prior application as state of the art

A European patent application shall be considered as comprised in the state of the art under Article 54, paragraphs 3 and 4, only if the designation fees under Article 79, paragraph 2, have been validly paid."

18. Under Article 54(3) and (4) EPC, a European patent application is part of the prior art for a later one inso far as a contracting state designated in the later European application was also designated in the earlier application as published.

19. The purpose of this provision is to avoid double patenting. Article 54(4) EPC is designed to prevent two or more European patents from being granted for the same subject-matter in any one country. However, this can never happen if a state is indeed designated in the later application but had its designation in the earlier application deemed withdrawn under Article 91(4) EPC because the corresponding designation fee had not been paid in due time. Within the meaning of Article 54(4) EPC a designation can thus only be a "paid" designation. Accordingly, the earlier European application's effects occur, if at all, only if the designations made in the application are confirmed through payment of the corresponding designation fees.

20. In the case of Euro-PCT applications, the Convention makes this explicitly clear in Article 158(1). In the case of direct European applications this clarification has so far been unnecessary, since by the time they are published the designation fees have generally been paid.

21. The amendment of Article 79(2) EPC will create the same situation for direct European applications as already exists for Euro-PCT applications. For this situation, that is where the designation fees are not yet due when the application is published, Article 158(1) EPC makes it explicitly clear that prior rights can arise only in respect of those states for which the designation fees have been paid.

22. If, however, a law contains a definite provision for a specific case, the principles of legal methodology dictate that this provision be applied to comparable cases where, because there was previously no need for a corresponding provision, none exists. Accordingly, the principle that prior rights within the meaning of Article 54(3) and (4) EPC can arise only on the basis of "paid designations" is also to be applied unmodified to direct European applications.3

New Rule 23a EPC makes this explicitly clear. It has a declaratory character and merely states in explicit terms that the EPC provision relating to the consideration of earlier European applications for the purpose of determining the state of the art also applies to direct European applications.

Insertion of Rule 51(8a) EPC

The following paragraph 8a (new) is to be inserted in Rule 51 EPC:

"(8a) If the designation fees become due after the invitation in paragraph 6 has been notified, the mention of the grant of the European patent shall not be published until the designation fees have been paid. The applicant shall be notified accordingly."

23. Where an applicant makes use of the programme for accelerated prosecution of European patent applications (PACE), the patent may be ready for grant before the designation fees are due. In order to permit rapid grant of the patent in such cases, and likewise to ensure payment of the designation fees, new paragraph 8a has been added to Rule 51 EPC.